Dear Shareholders,
FY 2022-23 was a year in which we achieved significant business success. Our continued
strong financial results show that we are successfully implementing our intelligent and
clean growth strategy. The strong foundations of our business - world-class manufacturing,
great people, and a robust balance sheet - have enabled us to achieve a solid financial
performance despite the challenging environment around us.
Strong track record of performance
We delivered a strong performance in FY 202223 across all our businesses in a difficult
macroeconomic environment. We have successfully navigated through these challenges by
maintaining our disciplined approach on cash preservation as well as by focussing on
operational efficiencies. Furthermore, the decision to introduce price increases
responsibly in the wake of inflationary pressures proved to be strategically correct. At
the same time, deepening our relationship with our suppliers guided us through the recent
supply chain bottlenecks. As a result, our net profit before tax stood at INR 733 cr and
revenue at INR 4,305 cr, up 38% and 17%, respectively over FY 2021-22.
These impressive figures illustrate our capacity to manage our portfolio by
prioritising high-growth segments, exercising disciplined cost control and pricing power,
and sustaining our organic sales growth momentum to achieve margin expansion. They are a
testament to our singular focus on executing our intelligent and clean growth strategy,
and above all, the unwavering commitment of our stakeholders.
In addition to our businesses performing well in FY 2022-23, we seized every
opportunity to create
outstanding value for our customers across the industrial and automotive segments. To
accelerate growth, we prioritised high-growth segments in our industrial business. We
provided unique solutions in segments such as renewable energy, where we see strong growth
potential and doubled down on strategic sectors such as cement and mining, where we
already have a strong market presence. Another sector where we see strong growth potential
is electric vehicles, where we are growing our presence as the preferred partner for
meeting mobility requirements.
SKF has been committed to sustainability for several years, making it an essential
component of our business. We are decarbonising our operations and also helping our
customers achieve their sustainability goals.
The progress we have made, and our collective commitment to accelerate our strategy,
gives me confidence that we have entered FY 2023-24 as a more customer-centric,
profitable, and fastergrowing company than ever.
Operating more efficiently
FY 2022-23 was marked as a year wherein we ramped up our focus on driving disciplined
cost management, increasing productivity and operational efficiencies at all levels to
spur growth.
With localisation as one of the key pillars of our strategy, we increased localisation
to 85% for direct materials during the year, helping us reduce costs and lead times.
In terms of upskilling our employees, we made remarkable progress in strengthening our
frontline sales and leadership teams to better understand the evolving needs of our
customers, work more efficiently and effectively, and create even greater value for all
our stakeholders. Further, we are continuing to invest in the ongoing development of our
employees so they can deliver technologically advanced products and solutions that our
customers demand from us.
Our objective has always been to create strong leaders, provide meaningful work
opportunities for our employees and ensure constant learning and development to enable
them to deliver against our priorities.
Being a global company, we believe our strength comes from our ability to tap into a
world of diverse views, thinking and backgrounds that our people bring to the workplace
every day. I am particularly proud to report that, in FY 2022-23, we recorded advancements
across many diversity metrics, improving gender diversity by 14 percentage points and
reaching 37% gender diversity in leadership roles through various programmes and
initiatives. We will continue to strengthen our capabilities further, increase
productivity and efficiencies, invest in our employees, and make progress on our
sustainability goals.
Looking after the planet
SKF has been committed to sustainability for several years, making it an essential
component of our business. We are decarbonising our operations and also helping our
customers achieve their sustainability goals.
We continue to make significant progress with our science-based net-zero targets. In FY
2022-23, we achieved a 1.7% reduction in our Scope 1 and 2 greenhouse gas emissions
compared to our 2021 baseline. Our efforts include sourcing 41% of energy from renewable
sources. We also continued undertaking energy efficiency
projects within our manufacturing processes to reduce energy consumption and wastage,
saving around 1.8 GWh of energy. We have set key performance indicators (KPIs) to
accelerate our progress in all ESG areas identified as material issues for SKF India. To
meet our net zero supply chain target by 2050, we are building competencies and
capabilities through partnerships across the entire value chain to find solutions to some
of the bigger challenges we face. We have introduced a supplier sustainability programme
with our top 50 suppliers across the country with a clear roadmap for the short and medium
terms.
This is an important step for SKF India and emphasises our commitment to sustainable
business.
We are working towards making our facilities more energy efficient, increasing our use
of renewable energy and reducing waste in our operations. We also strive to work closely
with our customers to develop new products that help them achieve their goals for
environmental stewardship. These initiatives, among others, are placing us on the right
trajectory to achieving net zero emissions goals.
Building an inclusive culture
Our talented, skilled, and collaborative teams have been central to our success,
empowered with a culture of equity and inclusion. In FY 2022-23, we continued to invest in
our people and provide opportunities for them to acquire new competencies and skills. One
such initiative that helps our employees advance their skills is LeadX - which aims to
build cross-cultural, cross-functional, and multiindustry experiences of employees.
Moreover, we continue to empower our sales leaders to develop best-in-class Go-To-Market
(GTM) and leadership capabilities through our iAspire programme. Our people managers are
also continuously provided with various training and tools to equip them with the skills
and capabilities needed to help their teams build technical, business and people skills.
Through all these programmes, our objective has always been to create strong leaders,
provide meaningful work opportunities for our employees and ensure constant learning and
development to enable them to deliver against our priorities.
During the year, we continued to focus on instilling safe work behaviour across our
factories, maintaining zero fatalities, and preventing and reducing injuries. As always,
we will remain committed to creating a workplace that supports all our employees' safety,
health, and well-being.
Making a positive impact on society
As a partner in nation-building, we consider it our responsibility to contribute
towards addressing a few of the societal and environmental challenges present today. We
work alongside non-profits to make a meaningful impact and change the lives of
beneficiaries in the communities where we operate.
Our range of long-term sustainable programmes, aimed at building partnerships,
generating optimal impact, and building capacities amongst all stakeholders are aligned to
the United Nations Sustainable Development Goals (SDGs).
From long-term programmes that provide access to financial aid to pursue higher
education to initiatives that address environmental needs, our programmes support
communities in various ways. In FY 2022-23, we positively impacted the lives of around
22,000 beneficiaries through our various CSR programmes. We also encouraged inclusivity
across our CSR interventions with 65% of our beneficiaries being women. In line with our
values and given our long history of commitment to our communities, we will continue to
collaborate with our partners to address major societal challenges, with an aim to
positively touch 400,000 lives directly by 2025.
Our purpose
Globally, we have now revealed SKF's purpose as ‘Together, we re-imagine rotation
for a better tomorrow.' This was a result of a company-wide co-creation exercise by so
many SKF employees around the world.
Our Company's reason for existence is our purpose, which seeks to drive positive change
in the world. It centres around serving society, fostering innovation, promoting
environmental well-being, and providing economic opportunities. Moving forward, we will
remain steadfast in our commitment to this purpose, aligning our plans accordingly and
following through with actionable steps.
Despite the numerous transformations that our Company has undergone, our purpose
remains a unifying force that drives us forward, shaping our culture and informing our
strategies. This guiding principle will continue to steer our business and assure us that
we are progressing in the right direction. Furthermore, it will enable us to identify how
we can best contribute to positively impacting the world.
Looking ahead
I am proud of what we achieved in FY 2022-23 and am excited about the momentum we are
building.
We have a new purpose, an ambitious strategy, and an empowered workforce. Keeping with
our culture of
In line with our values and given our long history of commitment to our communities, we
will continue to collaborate with our partners to address major societal challenges, with
an aim to positively touch 400,000 lives directly by 2025.
continuous improvement, we will focus on creating a safe and empowering culture,
improving the consistency of our performance, and meeting the evolving needs of our
customers.
We anticipate headwinds in FY 2023-24 as well.
However, our goal remains unchanged - making further progress against our strategy and
growing profitably.
I am confident that we have all the right ingredients - great people, world-class
manufacturing, strong partnerships, and unparalleled capabilities to respond to a shifting
competitive landscape and capture key growth opportunities. Our strategic priorities
position us well to grow profitably, and accelerate our momentum to deliver sustainable
growth and shareholder value.
On behalf of our leadership team, I would like to thank our employees, suppliers, and
partners for their efforts in delivering outstanding results for our Company and
shareholders throughout the year. I also extend my appreciation to our customers and
shareholders for their continued trust and confidence in our Company.
Warm regards,
Manish Bhatnagar
Managing Director